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Pundits expect DRAM chips' prices to escalate

The momentum of dynamic random access memory (DRAM) chips' price hikes is expected to continue throughout the current quarter, driven by the tight supply, industry veterans said yesterday.

"We expect DRAM spot prices to maintain their impetus in the third quarter, due to an insufficient supply of the computer-memory chips," Rebecca Tang (唐亦仙), vice president of a research and development group at ProMOS Technologies Inc (茂德), one of the nation's leading memory-chip makers, said on the sidelines of a press conference yesterday.

Spot prices of the most widely used computer memory chip, the 256 megabit, double-data-rate (DDR) DRAM, are likely to hit US$3 per unit in the July to September quarter, Tang said.

The executive attributed the current short supply of the popular DDR1 DRAM chips to chip makers' production shift to flash-memory chips during the poor market for DRAM chips earlier this year and the lower prevalence of next-generation DDR2 DRAM chips.

Rising spot prices could encourage the company to raise its contract prices for next month, Tang said.

Spot prices for 256 megabit DDR DRAM jumped by 4.4 percent last Friday, or 9.1 percent last week, the biggest weekly price surge since April 9 last year, driven by the supply shortage, according to DRAMeXchange.com.

The spot price for DDR 400 MHz rose by 0.15 percent to an average of US$2.64 per unit with a daily high of US$2.83 per unit as of press time yesterday, according to DRAMeXchange.com's data.

Looking ahead, DRAM markets will remain hot in the second half of this year, said Brian Shieh (謝再居), president of Powerchip Semiconductor Corp (力晶半導體), the world's sixth-largest memory-chip maker.

The market expects a supply gap of around 10 percent to 15 percent and Powerchip accordingly plan to raise its contact prices by 5 percent to 6 percent in the next quarter, Hsieh said, adding that with its manufacturing costs at around US$2 per unit, the company can surely only profit during the upswing in the market.

In tandem with the transition into next-generation products, DDR2 DRAM chips are expected to become the strongest mainstream product in the fourth quarter with a market share topping 70 percent at the most, from about 50 percent currently, the industry veteran predicted.

DDR2 will account for half of Powerchip's DRAM shipments at that time, he said.

Powerchip, ProMOS, Nanya Technology Corp (南亞科) and Winbond Electronics Corp (華邦電子) yesterday formed an alliance with the Electronics Research and Service Organization at the semi-official Industrial Technology Research Institute (ITRI) to deal with research and development of next-generation technology for DRAM chips, called Phase Change Memory (PCM).

The alliance plans to spend a total of NT$120 million (US$3.8 million) on developing PCM technology in the next three years, hoping to secure its position ahead of overseas competitors once the PCM starts to be commercialized and replace DRAM in 2008. PCM's output value is expected to exceed NT$10 billion in 2008 and reach NT$100 billion in 2012, ITRI said.

Taiwan overtook the US to become the world's second-largest DRAM supplier last year with a production value of NT$230 billion, according to the institute.

PCM is an advanced technology that features faster reading and reflecting speed, more power savings and bigger storage in smaller sizes than the current DRAM chips. Samsung Electronics Co, the world's largest memory-chip maker, as well as semiconductor giant Intel Corp, have invested in developing the technology and have already displayed their test chips.
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